12206 | The LUNC Forex

Source from:

• https://validator.info/terra-classic/governance/12206
• https://discourse.luncgoblins.com/t/proposal-lunc-forex-collateralized-stablecoin-module-csm-version-2/233

We create the worlds first decentralized foreign exchange, we do it by collateralizing our stablecoins 1 by 1 starting with EUTC.

Proposal: LUNC Forex Collateralized Stablecoin Module (CSM) VerSion 2

Rebuilding Global Confidence in Terra Classic through Real-Asset Collateralized Forex Stablecoins

1. Introduction

Terra Classic was once known for its ambition to bring decentralized stable assets to the world. This proposal marks the next evolution — transitioning from the legacy algorithmic Market Module (MM) to a Collateralized Stablecoin Module (CSM) that anchors value in fiat-backed and asset-collateralized stablecoins, beginning with EUTC, and expanding step-by-step into a global Forex ecosystem of 7.5 trillion $ of daily trading volume. Stablecoin market at the moment is a 50-150 billion $ daily trading volume.

The goal:

 Rebuild stablecoin utility safely.

 Create on-chain arbitrage and volume.

 Reignite global adoption — starting in the European market, and expanding to Asian and emerging gold-based markets.

2. Phase 1: Controlled Launch with Low-Supply Currencies

We begin gradually, focusing on low-supply, high-utility fiat stablecoins to limit systemic risk and test the CSM framework.

Phase 1 Assets

Stablecoin Region Initial Mint Cap Collateral Source

-EUTC Euro 50000/day Vaulted stablecoin reserves

Each minted stablecoin must be fully collateralized by a combination of:

• Vaulted collateral – whitelisted stablecoins like USDC USDT or PAXG to come with stable route)

• Dynamic mint cap to throttle growth and reduce exposure during initial rollout.

3. Phase 2: Expansion Toward the Asian Markets

Once EUTC repeg and collateralized, the next strategic expansion targets Asian reserve-driven markets and low cap stablecoins.

Planned Additions

Stablecoin Region Strategic Rationale

1. HKTC Hong kong dollar -36.4k supply total value at peg 4,677 USD
2. NOTC Norwegian Krone 31,028 supply total value at peg 3,026 USD
3. PHTC Philippines Pesos 207,349 supply total value at peg 3,527 USD
4. JPYTC Japan Trusted fiat in Asia, strong trade volume
5. CNYTC China Gold-backed expansion synergy
6. SGDTC Singapore Crypto-friendly regulatory environment
7. AUTC Australia Gateway to Oceania and Pacific trade routes

These expansions build the LUNC Forex Network, providing native liquidity for global trade and on-chain Forex swaps directly within the Terra Classic ecosystem.

4. Pool Pairing Strategy

Every CSM stablecoin will launch with dual-pair liquidity to guarantee on-chain utility and arbitrage opportunities:

• Stablecoin/LUNC (primary anchor pair)

• Stablecoin/USTC (stabilization and repeg utility)

Example:

• EUTC/LUNC EUTC/USTC

This design ensures every Forex stablecoin generates both arbitrage pressure and utility volume for LUNC and USTC simultaneously.

5. Fees and Risk Mitigation

To ensure sustainability and reduce exploit potential, the following dynamic fees will apply during the initial deployment phase.

• 2% Mint Fee → sent to community pool and reserve vault, buys back and vault USTC and LUNC and funds oracle pools

• 4% Redeem Fee → prevents rapid cycling and arbitrage abuse and fund all the above as well 2x

• Daily Mint Cap: adjustable parameter by governance to manage risk exposure and collateral depth. A % of liquidity available in the pools should be in place to prevent being drained. As liquidity grows so does mint caps.

This approach guarantees controlled growth while ensuring continuous community funding.

6. Required Upgrades and Module Adjustments

To implement this proposal, the following upgrades are required:

6.1 Market Module → Collateralized Stablecoin Module (CSM)

Replace the current Market Module’s algorithmic mint/burn mechanism with a CSM that requires verifiable collateral backing before minting.

• Mint = Deposit USDC/USDT collateral to Vault

• Redeem = Burn stablecoin + pay redemption in USDC

6.2 Fiat Price Oracles

Onchain oracle live fiat prices

• USD, EUR, GBP, JPY, CAD, SGD, AUD, CNY and more.

Ensures real-time (30 sec refresh), accurate conversion and mint ratios.

6.3 Vault Infrastructure

A smart vault system will:

• Lock collateral (USDC USDT, PAXG, etc.)

• Maintain over-collateralization ratios 101-103%

• Track minted outstanding supply

• Automatically rebalance mint caps based on collateral depth and volatility

7. Economic Impact

• Increases on-chain volume via LUNC + USTC pools.

• Adds new minting/burning pathways tied to real-world fiat demand.

• Restores trust in stablecoin minting via full collateralization.

• Positions LUNC as the global bridge asset for multi-currency swaps.

This model transforms Terra Classic into a global DeFi Forex hub, capable of hosting pegged assets for all major currencies while sustaining LUNC’s deflationary momentum.

8. Governance Parameters

Parameter Default Adjustable by Gov

 Mint Fee 2%

 Redeem Fee 4%

 Daily Mint Cap % liquidity pools

 Collateral Ratio 101-103%

 Oracle Source onchain fiat oracle

9. Vision: LUNC as the Decentralized Forex Hub

By integrating fiat-priced, collateralized stablecoins directly into the Terra Classic economy, this proposal:

• Creates a decentralized Forex exchange layer on-chain.

• Brings real-world trade liquidity to LUNC.

• Positions Terra Classic as the chain of choice for currency-backed DeFi assets.

10. Conclusion

The LUNC Forex CSM proposal revives Terra Classic’s original vision—this time with real collateral, transparent mechanics, and risk-controlled scaling.

Starting with EUTC, we build credibility through gradual growth, then scale outward into global currencies and Asian markets, ensuring LUNC once again becomes the beating heart of a decentralized, cross-currency financial system.

Wed need :

150K usd in liquidity:

75k in USDC and 75K in LUNC + USTC

(75k usdc to mint eutc(comes back as vaulted collateral)

• 2 pools per dex: EUTC/LUNC 35k EUTC/USTC 15k

For following stablecoins:

we have 3 tier of stablecoins and we deploy respective amount of liquidity/tier on all 3 dexs

• Tier 1 top 10 fiat currency 50k / dex Tier 2 emerging fiat currencies 20k / dex Tier 3 evolving currencies and metals 10k / dexTier 4 micro markets 5k / dex

Dev work:

-Adjusting MM parameters

-Vault for collateral

-whitelist admin wallets for swapping and trading

-oracle intergration and testing (every 30 sec)

– “kill switch” in case of extraordinary market conditions to shut down mint redeem functionality.

-estimate work time 2-3 months

Signed

Lunverse Validator & DO Cookie